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Frasers Hospitality Trust’s Latest Business Performance Across The Globe

Frasers Hospitality Trust (SGX: ACV) is a stapled trust that comprises a real estate investment trust and business trust. It focuses mainly on hotels and serviced residences around the world. Right now, its portfolio consists of 15 properties located across nine cities in Asia, Australia, and Europe.

In late October, the trust reported its earnings for the fourth quarter of its fiscal year ended 30 September 2017 (FY2017). Given that the trust is geographically diversified, I thought it would be useful for investors to have a quick summary on how each of the trust’s geographical markets have performed.

Performance in Singapore

Here’s a slide from Frasers Hospitality Trust’s latest earnings presentation on how its properties in Singapore have performed in the fiscal fourth quarter:


Source: Frasers Hospitality Trust FY2017 fourth quarter earnings presentation

Here’s what the various abbreviations mentioned in the slide mean:

1) ADR: Average daily rate

2) Ave OCC: Average occupancy

3) Ave RevPAR: Average revenue per available room

4) GOR: Gross operating revenue

5) GOP: Gross operating profit

From the information given above, we can see that Singapore’s overall performance for the reporting quarter was mixed.

On the negative side, both GOR and GOP declined year-on-year, mainly due to a decline in banquet revenue in Intercontinental Singapore and a lower ADR in Fraser Suites Singapore. On the positive, there was a stronger occupancy rate in the Singapore portfolio, driven mainly by improvements in Intercontinental Singapore.

Performance in Japan

Coming to Japan, here’s how Frasers Hospitality Trust performed in the country:


Source: Frasers Hospitality Trust FY2017 fourth quarter earnings presentation

The trust did not have a good quarter in Japan. GOR was down 3.9% year-on-year, while GOP fell 7.7%, due to lower banquet revenue from weddings. On a slightly positive note, the ADR was marginally higher than the same period last year.

Performance in Malaysia

We’re now in Malaysia. Here’s how the trust did in the country in the fiscal fourth quarter:


Source: Frasers Hospitality Trust FY2017 fourth quarter earnings presentation

Unlike Singapore and Japan, Frasers Hospitality Trust did well in Malaysia with double-digit growth in both GOR and GOP.

But, the trust cautioned that an increase in room supply in Kuala Lumpur over the next few years may put pressure on its room rates.

Performance in Australia

This is how Frasers Hospitality Trust did in Australia:


Source: Frasers Hospitality Trust FY2017 fourth quarter earnings presentation

It was a great quarter from Australia, as GOR and GOP both increased by 40% or more.

The September 2016 acquisition of Novotel Melbourne on Collins helped fuel the growth in the Australian market. But, the Ave RevPAR for the trust in Australia was down year-on-year , due largely to the refurbishment of Novotel Rockford Darling Harbour.

Performance in the United Kingdom

And finally, we’re in the last country Frasers Hospitality Trust operates in, the UK.


Source: Frasers Hospitality Trust FY2017 fourth quarter earnings presentation

The trust’s performance in the UK was positive overall, driven by a higher ADR and Ave OCC, which led to growth in GOR.

On the negative side, an increase in the minimum wage in the country resulted in operating costs growing faster than revenue. Consequently, there was a lower growth rate for GOP as compared to GOR.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.